ADD REBALANCING TO YOUR ANNUAL TO-DO LIST
Thanks to a bull market in stocks that has stretched deep into its second year, stocks have trounced bonds since March 2020, when the relentless climb began. As of early October, the S&P 500 index has more than doubled, compared with a 4.2% return for U.S. bonds, as measured by the Bloomberg U.S. Aggregate Bond index. But there’s a potential downside to the big rally: Many investors might be holding a bigger stake in stocks than their risk tolerance calls for. And that could make portfolios more vulnerable to a stock market downdraft.
There’s an easy fix: Rebalance your portfolio to get your asset weightings back in line with your desired allocation. “Rebalancing prevents you from taking unintended risks,” says Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
Start by tallying up the total dollar value of the stocks, bonds and cash you hold in your taxable and retirement accounts. If you own a fund that invests in both stocks and bonds, such as a balanced fund or target-date fund, review the fund’s latest holdings to see how much it holds in each major asset class. To find out your current asset mix, calculate the percentage of each asset class relative to your total portfolio. For example, if you have a $1 million portfolio and $750,000 is now held in stocks, your equity stake is 75%.
This story is from the December 2021 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the December 2021 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
A SOLID YEAR FOR THE KIPLINGER 25
All but one of our favorite actively managed, no-load mutual funds gained ground as markets recovered.
YOUR VACATION HOME COULD PROVIDE TAX-FREE INCOME
If you plan to rent out your vacation home, it's important to understand how your proceeds will be taxed.
IT'S NOT YOUR IMAGINATION: YOUR CEREAL BOX IS SHRINKING
To avoid raising prices, some manufacturers are reducing the size of common grocery items. Here’s how to fight back.
SHOULD YOU WORRY ABOUT BEING LAID OFF? IT DEPENDS ON YOUR INDUSTRY
Downsizing has hit certain sectors. But cutbacks may be slowing, and some companies are expanding.
How identity thieves are exploiting your trust
Con artists themselves are disguising as well-known brands to steal your money and personal information.
CUT THE COST OF YOUR WIRELESS BILL
AT&T, T-Mobile and Verizon dominate the market, but smaller outfits offer similar network coverage at lower prices.
MAKING HOME ENERGY MORE AFFORDABLE
Households in need can get energy-efficiency upgrades, help with utility bills and more from this nonprofit.
A HEAD START FOR SAVERS
The Saver's Credit is designed to help low- and middleincome taxpayers contribute to a retirement account.
Say I Love You With a Money Date
To nurture a lasting bond with your partner, meet regularly to talk about money.
Plan for Your Own Elder Care
AFTER I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”
